In a novel arrangement, the pharmaceutical maker Allergan has enlisted the Saint Regis Mohawk Tribe to help protect the dry-eye drug Restasis against patent challenges by would-be competitors.

The New York tribe, which could be immune from federal patent challenges, has taken ownership of six patents covering the cyclosporine emulsion eye treatment. Allergan retains exclusive licenses to the patents until they end in 2024. Allergan will make a one-time payment of $14 million plus $15 million in annual royalty payments to the American Indian tribe.

If it succeeds, Allergan’s gamble will protect a $1.5 billion revenue stream representing about 10% of the firm’s annual sales. The deal could also be a harbinger of similar agreements by other branded pharmaceutical makers who had previously relied on “pay for delay” drug deals. Those deals pay competitors to delay the introduction of generic versions of drugs with disputed patents.

Because the tribe is considered an autonomous state under U.S. law, Allergan believes it is immune from U.S. Patent & Trademark Office actions that could invalidate the Restasis patents. Competitor Mylan asked for USPTO hearings last year, claiming Allergan’s discoveries were anticipated by previous patents.

USPTO has previously exempted state-owned universities from patent challenges under the legal concept of sovereign immunity, explains Richard Chinn, a partner in the intellectual property law firm Oblon, McClelland, Maier & Neustadt. “Under the U.S. Constitution, states are immune against suits in federal courts,” he says.

The question, Chinn says, is will USPTO accept the sovereign status of the St. Regis tribe? Mylan doesn’t think it should and calls the deal “a transparent, last-minute attempt to shield the [patents] from inevitable cancellation.”

Mylan’s protest comes from a notice it filed on Sept. 11 in a concurrent Texas federal court lawsuit brought by Allergan to stop Restasis generics from Mylan and other firms. Mylan adds that the change in patent ownership would not only give Allergan an undeserved victory with USPTO but also affect Mylan’s defense in the court case.

Can a foreign sovereign sue for patent enforcement in the US? Do they have all the rights and privileges a domestic firm or patent holder does?If not than couldn't Mylan and other generics manufacturers should ignore or otherwise challenge any anti-infringement action taken by Allergan?